Through the Looking Glass

A chronicle of the absurd, in politics and life

Thursday, March 17, 2005

Fun fact: Alan Greenspan received the Enron Award for Distinguished
Public service. Even in fall, 2001, as the company fell into its
death spiral, having already confessed to cooking the books, it wasn't
ashamed to give the award, and a recent documentary shows him beaming,
receiving it.

It's been common, in liberal circles lately, to wonder if Greenspan
isn't a bit of a political hack. But perhaps, to be fair and
balanced, we should also be touting his awards and achievements --
particularly the lesser-known ones. This one in particular
seems... worthy of note.

Judge George Greer, the poor guy responsible for the Terri Schiavo
case, styles himself a "compassionate conservative". And as he
considers himself bound by law to order what would have happened in
another case long ago, he's feeling
the compassion of his fellow conservatives:

"It's killing me to watch him struggle with this," said
Mary Repper, a retired political consultant who worked on several of
Judge Greer's campaigns. "Armed guards with him all the time. People
threatening to kill him and claiming it has something to do with the
right to life - explain that, will you?"

In Soviet Communism, the Capitalist West faced an implacable enemy.
But also one that was just plain creepy. Not least for its promotion
of official illusions. Newpapers were rigorously censored. Reference
materials were cut to fit the political winds -- the past was
literally rewritten to suit the needs of the present. People who fell
out of favor were airbrushed out of photographs. Subscribers to one
encyclopedia were, at one point, famously asked to remove an article
on the head of the secret police, Beria -- replacing it with an
expanded piece on the Bering Sea.

The Chinese Communist party, these days, is different. But only
in so far as they seem to like capitalists. For the moment. (The New York Times link
generator can't find a permanent link to that article -- but that,
I'm sure, is strictly coincidence).

Then again, maybe they like capitalists because our current
generation of American capitalists seems to think like
them:

The enduring legacy of Enron can be summed up in one word:
propaganda. Here was a corporate house of cards whose business few
could explain and whose source of profits was an utter mystery - and
yet it thrived, unquestioned, for years. How? As the narrator says in
"The Smartest Guys in the Room," Enron "was fixated on its public
relations campaigns." It churned out slick PR videos as if it were a
Hollywood studio. It browbeat the press (until a young Fortune
reporter, Bethany McLean, asked one question too many). In a typical
ruse in 1998, a gaggle of employees was rushed onto an empty trading
floor at the company's Houston headquarters to put on a fictional show
of busy trading for visiting Wall Street analysts being escorted by
Mr. Lay. "We brought some of our personal stuff, like pictures, to
make it look like the area was lived in," a laid-off Enron employee
told The Wall Street Journal in 2002. "We had to make believe we were
on the phone buying and selling" even though "some of the computers
didn't even work."

And Dubya is bringing that ethos to our government, as in his
"conversations on Social Security":

Not only are the panelists for these conversations
recruited from administration supporters, but they are rehearsed the
night before, with a White House official playing Mr. Bush. One
participant told The [Washington] Post, "We ran through it five times
before the president got there." Finalists who vary just slightly from
the administration's pitch are banished from the cast at the last
minute, "American Idol"-style.

Perhaps that's why Dubya feels comfortable, as Tom Friedman notes in a rare
good column, running deficits that make us utterly dependant on
the goodwill of the Chinese, who are financing them, for our economic
well being. In effect, we've sold them rope that they could use to hang
us. Maybe he thinks they just won't abuse the power. They're
his kind of people.

The economically rational way to organize things is to give people
financial incentives to act the way you want. If you want executives
to generate profits, for instance, one thing you can do is promise
them large bonuses for making financial targets. Which almost
guarantees that you'll show hefty profits on the books.

Of course, there's more than one way to make that happen. One is
to actually improve the health of your business. Another is to cook
the books, take the bonus and run.

Tuesday, March 15, 2005

Here's another entry in my highly irregular series of economics
puzzlers. This one will have more of a practical bent: Why is it
interfering in trade when California tries to regulate toxic gasoline
additives, but not when China pegs currency values?

I'm perhaps jumping the gun here a little bit. I'm referring to a
case brought by a Candian company which was distressed to find that
California had banned its gasoline additive. So, using provisions of
the North American Free Trade Agreement, they are suing -- not in
either an American or a Canadian court, but in a secretive tribunal
set up by NAFTA. As I write, there has been no ruling yet. So, the
board has not yet hit up the taxpayers of California for the billion
dollars or so that the company is asking for. But they
could.

So, what's going on here?

The world is getting increasingly bound up in trade treaties --
from NAFTA to the WTO agreements. And one of the things
these treaties try to do to promote trade is to keep governments from
levying tariffs and the like which retard trade. But tariffs are only
one way that a government could try to keep foreign products out.
They could also impose discriminatory health and safety regulations
which ban foreign products outright for spurious reasons. And so, the
treaties set up a mechanism of review panels to see whether a
regulation is actually legitimate -- and to levy fines if it is not.

The upshot is that while these organizations are set up for the
ostensible purpose of promoting trade, they are given review power
local laws. More to the point, they are set up to treat them all --
not just, say, tariffs, but local environment and safety regulations
as well, uniformly as "barriers to trade". To which they have only
one possible response -- to demand removal of the "barriers", and
penalize governments that keep them up.

It doesn't have to be that way. Disparate regulations in
different jurisdictions do create trade friction -- but that friction
could be resolved by subjecting countries to trade sanctions if they
don't have health and safety regulations which meet certain
basic standards. However, these organizations are not, in practice,
really set up to do that. They can call for these regulations, as
"trade barriers" to be removed; they cannot, or at any rate do not,
call for them to be created or credibly enforced. The upshot is that
a transnational corporation which finds local laws to be inconvenient
can appeal to the WTO without fear; it'll either do nothing, or strike
them down. Which makes these organizations powerful tools for
corporations against the state, and against even beneficial kinds of
regulation.

Now, it is one thing to believe that trade is good; it is another
to believe that trade has a kind of transcendent goodness which
deserves this kind of support. Particularly when the trade agreements
are silent on yet another government strategy for influencing trade:
by manipulating the value of their currency relative to others. The
Chinese government, for instance, has "pegged" the value of its
currency, the renminbi, to the dollar, and is buying immense amounts
of dollar-demonminated securities (mostly treasury bonds and
mortgage-backed securities) to prop up the dollar. It is widely
acknowledged that if they stopped doing this, the result would be that
the prices of Chinese goods in the U.S. would rise, and the prices of
American goods in China would fall. And that this is a deliberate
goal of the policy. China, in effect, has made American goods
artificially more expensive -- retarding trade every bit as much as a
tariff -- while also, in effect, subsidizing its exports to America.
Even better: neither the subsidy nor the tariff is subject to the
trade rules of the WTO. Environmental regulations can be reviewed by
trade boards; monetary policy, even though it has a far more pervasive
influence on trade, cannot.

(It's worth noting that, on China's part, this is one component of
an overtly mercantile economic strategy which would not be dear to the
hearts of the free traders. In fact, they are moving more directly to
poach viable industry from the U.S. -- pressuring Silicon Valley
companies like Cisco, and through Cisco, its subcontractors, to move
jobs to China whether there's an economic rationale for that or
not. This may not
be sustainable, and if it all falls apart, both sides of the
relationship may be hurt at the end of it. But if the Chinese see the
game of the next century as a battle with us for economic power, they
may not care how badly they wind up, so long as we wind up worse. But
that's a topic for another day).

Obviously, a government might have perfectly good reasons to alter
its monetary policy for reasons other than its effects on trade, per
se. But that's true for environmental and safety regulations as well.
Indeed, there already are large, transantional institutions, full of
free trade advocates, which
already dictate monetary (and even fiscal) policy for many third-world
nations -- the World Bank and the IMF. The results aren't always pretty,
but they do it.
Hence, the puzzle: If the trade organizations' review processes are
good enough for the one, why are they not trusted to oversee the
other?

One last point: opposition to trade treaties and their review
boards and the like is often painted not as opposition to a particular
mechanism for the promotion of international trade, which has certain
unfortunate side effects, but rather as "opposition to trade" per se.
This takes framing into the realm of non-Euclidean geometry. It's
impossible to believe that most of the victims of the "Miamimodel"
were demonstrating in opposition to trade per se, because
there's no earthly reason for most of them to give a damn about it --
and plenty of reason for them to care about the environment and about
labor conditions, which are their actual, stated concerns).

There are plenty of ways to promote trade
without imposing unaccountable review boards, gutting democracy and
self-rule. What African farmers and textile workers need most to get
their products into the United States isn't a few more bureaucrats
reviewing EPA regulations in Geneva -- it's a vote in Washington to
take away import barriers and price supports, which we can do all on
our own without negotiating a thing with anybody.

And so it would be a lot easier to take the advocates of
unaccountable, supranational organizations with veto power over local
health and safety regulations as advocates for trade, per se,
if they were more willing to put those proposals on the shelf until we
were rid of the goddamn price supports -- a point which applies not
just to the current administration, but to its predecessors, whose
record on this point is likewise nothing to brag about.

Monday, March 14, 2005

Before the election, Abu Aardvark reminded us all what
it was about: he posted one of the Abu Ghraib torture shots (not
one of the worst), and said:

Vote for this or against it.

It really isn't that complicated.

I haven't posted much on torture, because I don't have the heart
for it. The last time was I think I had much to say about it was in
February, when Jane Mayer's article on "extraordinary rendition"
revealed that we were kidnapping guys out of Bosnia and shipping them
to Guantanmo. (Some apparently feel that it's a bigger deal that we're
also kidnapping people out of Italy, without the cooperation of
the Italian government. Sadly, they may be right).

Well, on the off chance that I'm your only lefty blog, Jeanne D'arc
has a review of the
other stuff you're missing, in the middle of a long meditation on
the stark fact that, presented with Abu Aardvark's choice, "vote for
this or against it", an apparent majority of Americans voted for it.
(I know even
Bush-ophile Christopher Hitchens has his doubts about the
totals. Spare me. It shouldn't be close).

After the election, Jeanne tried to rationalize it by saying that
maybe they voted on other issues. And lately, faced with the
continuing flood of stories (again, see her piece, I haven't got the
heart for it), she's starting to doubt that.

Me, I think it's plausible. Because it's easy enough to just avoid
this news if you don't want to hear it. Most people haven't got the
heart -- not unless broadcast news (the only kind that really
matters) were reminding them on at least a weekly, if not a daily
basis. And the reporters -- they don't have the heart either.

Meanwhile, those interested in my post from last
week about the
Army's indoctrination of new recruits might want to read this
article about their
home movies (via King of
Zembla). As to the type of war they wind up fighting, Juan Cole's
post on the
aftermath in Fallujah might be a useful gut check. Three out of
four water purification plants are destroyed; the fourth is badly
damaged. And then there's the damage to housing, from which Cole
quotes an AFSC report: "It is estimated that 40 percent of the
buildings were completely destroyed, 20 percent had major damage, and
40 percent had significant damage." Add up the numbers.

Again, for reasons I explained in my first post,
I'm not completely sure that the Army is wrong to train troops like
this. But if you build a force for absolutely savage warfare -- and
make no mistake, that's what we have -- it's immoral and just plain
crazy to try to use it to keep the peace.